Consumers shopping for a used car last month encountered record high prices, according to the latest Manheim Market Report (MMR). Used car values increased each week throughout September.
Three-year-old vehicles -- typically the cars and trucks that are most in-demand -- increased in value by 4.6%. Throughout the entire month, buyers paid more than the MMR values. Despite there being higher prices, 65% of shoppers ended up buying a vehicle, compared to 52% in 2019.
Every type of vehicle saw price increases in September, but some increased more than others. The price of a van rose nearly 41% from September 2020. Pickup trucks, already among the most expensive used vehicles, rose by another 17.8%. Overall, prices were up 27.1%.
Like many segments of the economy, supply chain issues have reduced automotive inventories and led to higher prices. Since early in the pandemic, there has been a shortage of new cars and trucks, mainly because of a shortage of computer chips. In recent months, supply chain bottlenecks have created shortages of other parts.
With fewer new cars, consumers in the market for a car or truck have turned to used car lots. Analysts say rising demand for used cars and trucks has increased the price dealers can get. Pablo, of Okeechobee, Fla., told ConsumerAffairs he paid top dollar for the vehicle he bought from Carvana last month.
“I read that Carvana is a bit higher priced and noticed the KBB for our car was approx $1000 less,” Pablo wrote in his review. “With used cars, it's difficult to gauge.”
Prices were up, sales were down
Dealers may have gotten top dollar for their inventory in September, but they sold fewer vehicles. Cox Automotive, the parent company of Manheim, reports that total used vehicle sales were down 13% year-over-year on a seasonally adjusted basis (SAAR).
“We estimate the September used SAAR to be 36 million, down from 40.9 million last September and down compared to August’s 36.5 million SAAR,” Cox Automotive said in a press release. “The September used retail SAAR estimate is 19.5 million, down from 21.7 million last year and flat month-over-month.”
Cox’s research suggests that consumers have been discouraged by an inability to find a new car and higher prices for used vehicles. It says plans to purchase a vehicle in the next six months declined to the lowest level in eight months and was much lower than a year ago.
But for consumers who are able to find a new vehicle to their liking, there may have never been a better time to trade in a used car or truck.